Restaurant Industry Forecast predicts strong growth amid economic challenges

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, Dec. 12, 2012- While the operating environment will remain challenging, America's 980,000 restaurants are expected to post record sales and continue to be a leading job creator in 2013, according to the National Restaurant Association's (NRA) 2013 Restaurant Industry Forecast released today.

Total restaurant industry sales are expected to exceed $660 billion in 2013 - a 3.8 percent increase over 2012, marking the fourth consecutive year of real sales growth for the industry.

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“Despite a continued challenging operating environment, the restaurant industry remains a strong driver in the nation's economy,” said Dawn Sweeney, president and CEO of the National Restaurant Association.

Additionally, 2013 will be the 14th straight year in which restaurant industry employment will outpace overall employment. Restaurants will employ 13.1 million individuals next year as the nation's second-largest private-sector employer, representing 10 percent of the total U.S. workforce.

“Restaurants are offering products and services that consumers actively seek out and enjoy; an activity in which consumers are selecting to engage despite cash-on-hand restraints because it is an important component of their lifestyle.” added Hudson Riehle, senior vice president, Research & Knowledge for the National Restaurant Association.

Total U.S. employment grew at a rate of 1.4 percent in 2012, while restaurants added jobs at a strong 3.0 percent rate - more than double the overall rate. In 2013, the NRA expects the restaurant industry to add jobs at a 2.4 percent rate, nearly a full percentage point above the projected 1.5 percent gain in total employment.

NRA expects restaurants to add 1.3 million new positions in the next decade, pushing industry employment to 14.4 million by 2023. This growth will present labor challenges, noted the report. “As the U.S. labor pool is starting to become shallower restaurant operators in all segments expect recruitment and retention to be more challenging in 2013 than in 2012.”

Food cost is a top challenge cited by restaurateurs across the industry, in addition to the economy and health care reform. The report noted wholesale food costs will continue to increase in 2013, putting pressure on restaurants' bottom lines as about one-third of sales in a restaurant goes to food and beverage purchases.

“The sluggish economic and employment recovery impacts consumers' cash-on-hand situation, which in turn impacts restaurants as there is a strong correlation between consumers' disposable income and restaurant sales,” NRA explained. The report also noted a survey that indicates 2 out of 5 consumers are not using restaurant as often as they would like, so if economic conditions improves, that demand may to turn into sales.

“Preparing for the implementation of health care reform will put additional cost pressure on some restaurant operators in the near future,” stated NRA. The report explained that one-third of a typical restaurant's sales go toward labor costs, so increases in those costs will result in additional measures to preserve the already slim pre-tax profit margins of 3-5 percent on which most restaurants operate.

Regarding consumer trends, the NRA report noted among the strongest consumer trends for 2013 are local sourcing and nutrition. More than seven out of 10 consumers say they are more likely to visit a restaurant that offers locally produced menu items, and more than six out of 10 said locally sourced menus are a key attribute for choosing a restaurant.

Also, their surveys indicate more than seven out of 10 consumers say they are trying to eat healthier at restaurants now than they did two years ago; women more so than men (75 percent vs. 66 percent). Similarly, about three-quarters of consumers say healthy menu options are an important factor when choosing a restaurant (80 percent of women vs. 71 percent of men).  NRA concluded that “restaurants are responding to this increasing demand for nutritious options, as 86 percent of consumers say that restaurants are offering a wider variety now than two years ago.”


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